Self-Regulatory Organizations; Fixed Income Clearing Corporation; Notice of Filing of Proposed Rule Change To Amend Mortgage-Backed Securities Division Rules Relating to Allocation of an Indemnity Claim Made in Connection With the Use of the Federal Reserve's National Settlement Service, 25129-25130 [2013-10026]

Download as PDF Federal Register / Vol. 78, No. 82 / Monday, April 29, 2013 / Notices SECURITIES AND EXCHANGE COMMISSION [Release No. 34–69423; File No. SR–ICEEU– 2013–05] Self-Regulatory Organizations; ICE Clear Europe Limited; Notice of Withdrawal of Proposed Rule Change Regarding Central Counterparty Resolution and Recovery Procedures April 22, 2013. On March 7, 2013, ICE Clear Europe Limited (‘‘ICE Clear Europe’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 1 and Rule 19b– 4 thereunder,2 a proposed rule change to adopt new provisions relating to clearinghouse resolution and recovery following the exhaustion of available resources after a Clearing Member default or a series of Clearing Member defaults. Notice of the proposed rule change was published in the Federal Register on March 28, 2013.3 The Commission did not receive comments on the proposed rule change. On April 19, 2013, ICE Clear Europe withdrew the proposed rule change (SR–ICEEU–2013–05). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.4 Elizabeth M. Murphy, Secretary. [FR Doc. 2013–10017 Filed 4–26–13; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–69434; File No. SR–FICC– 2013–03] Self-Regulatory Organizations; Fixed Income Clearing Corporation; Notice of Filing of Proposed Rule Change To Amend Mortgage-Backed Securities Division Rules Relating to Allocation of an Indemnity Claim Made in Connection With the Use of the Federal Reserve’s National Settlement Service emcdonald on DSK67QTVN1PROD with NOTICES April 23, 2013. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that on April 15, 2013, the Fixed Income Clearing 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 Securities Exchange Act Release No. 69209 (Mar. 22, 2013), 78 FR 19057 (Mar. 28, 2013). 4 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 2 17 VerDate Mar<15>2010 14:16 Apr 26, 2013 Jkt 229001 Corporation (‘‘FICC’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by FICC. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The purpose of the proposed rule change is to correct Rule 11, Section 5(o), of FICC’s Mortgage-Backed Securities Division (‘‘MBSD’’) Clearing Rules in order to accurately reflect the manner in which FICC should allocate an indemnity claim made in connection with the use of the Board of Governors of the Federal Reserve System’s (‘‘FRB’’) 3 National Settlement Service (‘‘NSS’’).4 II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, FICC included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. FICC has prepared summaries, set forth in section (A), (B) and (C) below, of the most significant aspects of such statements.5 (A) Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change FICC’s Government Securities Division (‘‘GSD’’) and MBSD each use the FRB’s NSS for Funds-Only Settlement 6 and Cash Settlement 7 purposes, respectively. GSD’s Rule 13 3 The acronym ‘‘FRB’’ is a defined in MBSD’s Clearing Rule 1 (Definitions) as the Board of Governors of the Federal Reserve System and each Federal Reserve Bank, as appropriate. 4 The text of the proposed rule change is provided as Exhibit 5 to this filing and is available at www.dtcc.com/downloads/legal/rule_filings/2013/ ficc/SR_FICC_2013_03.pdf. 5 The Commission has modified the text of the summaries prepared by FICC. 6 ‘‘Fund-Only Settlement Amount’’ is defined under Rule 1 of GSD’s Rulebook as the net dollar amount of a netting member’s obligation, calculated pursuant to GSD’s Rule 13, either to make a fundsonly payment to GSD or to receive a funds-only payment from GSD. See GSD Rule 13 for the rules related to funds-only settlement. 7 ‘‘Cash Settlement’’ is defined under Rule 1 of MBSD’s Clearing Rules as the payment each business day by MBSD to a member or by a member to MBSD. See MBSD Rule 11 for the rules related to cash settlement. PO 00000 Frm 00072 Fmt 4703 Sfmt 4703 25129 and MBSD’s Rule 11 address the situation where the FRB makes an indemnity claim in connection with the use of the NSS service by FICC. Pursuant to the GSD and MBSD rules, if FICC receives an FRB indemnity claim, FICC will apportion the entire liability to the GSD netting members or MBSD clearing members, as applicable, for whom the settling bank was acting at the time.8 If such amounts are not sufficient to fully satisfy the FRB indemnity claim, each of the GSD and MBSD rules currently provide different directives as to how FICC should handle the remaining loss. The GSD rules state that FICC will treat the remaining loss as an ‘‘Other Loss,’’ as defined in GSD Rule 4, and allocate accordingly.9 In contrast, MBSD Rule 11, Section 5(o), states that FICC will allocate the remaining loss among all MBSD clearing members in proportion to their relative use of the MBSD services (based on fees). The purpose of the proposed rule change is to correct MBSD’s Rule 11 in order to accurately reflect the correct manner in which FICC should allocate an indemnity claim made in connection with the use of the FRB’s NSS. The MBSD provision in Rule 11 was drafted prior to the MBSD becoming a central counterparty and adopting a loss mutualization process similar to the GSD process. When FICC filed its rule change to provide guaranteed settlement and central counterparty services,10 which among other things established the loss mutualization process, the MBSD NSS indemnity provision requiring the current loss allocation process was inadvertently overlooked and therefore not updated during FICC’s efforts to harmonize the GSD and MBSD rules. Accordingly, the rule change proposes to correct this oversight by revising MBSD Rule 11, Section 5(o), to reflect that all remaining losses from a FRB indemnity claim should be treated as an ‘‘Other Loss’’ as defined in MBSD Rule 4 and allocated accordingly. FICC believes the proposed rule change is consistent with Section 17A of the Act and the rules and regulations thereunder because it would facilitate the prompt and accurate clearance and settlement of securities transactions by correcting MBSD’s rules to accurately reflect the loss allocation procedures in 8 See GSD’s Rule 13 Section 5(o) and MBSD Rule 11, Section 5(o). 9 Rule 4(f) of GSD’s Rulebook. 10 Exchange Act Release No. 66550 (March 9, 2012), 77 FR 15155 (March 14, 2012) [File No. SR– FICC–2008–01] (order approving amended proposed rule change to allow MBSD to provide guaranteed settlement and central counterparty services). E:\FR\FM\29APN1.SGM 29APN1 25130 Federal Register / Vol. 78, No. 82 / Monday, April 29, 2013 / Notices connection with NSS and to ensure that there is consistent treatments of such losses between the MBSD and GSD rules. (B) Self-Regulatory Organization’s Statement on Burden on Competition FICC does not believe that the proposed rule change will have any impact or impose any burden on competition. (C) Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others Written comments relating to the proposed rule changes have not been solicited or received. FICC will notify the Commission of any written comments received by FICC. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 45 days of the date of publication of this notice in the Federal Register or within such longer period up to 90 days (i) as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (A) By order approve or disapprove the proposed rule change, or (B) institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public Reference Section, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such filing will also be available for inspection and copying at the principal office of FICC and on FICC’s Web site at https://www.dtcc.com/downloads/ legal/rule_filings/2013/ficc/ SR_FICC_2013_03.pdf. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–FICC– 2013–03 and should be submitted on or before May 20, 2013. For the Commission by the Division of Trading and Markets, pursuant to delegated authority.11 Elizabeth M. Murphy, Secretary. [FR Doc. 2013–10026 Filed 4–26–13; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION Electronic Comments [Release No. 34–69429; File No. SR–BOX– 2013–21] • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rulecomments@sec.gov. Please include file Number SR–FICC–2013–03 on the subject line. Self-Regulatory Organizations; BOX Options Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 7170 To Clarify That the Exchange May Grant Obvious Error Relief in the Event of Unusual Circumstances emcdonald on DSK67QTVN1PROD with NOTICES Paper Comments • Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–FICC–2013–03. This file number should be included on the subject line if email is used. To help the Commission process and review your VerDate Mar<15>2010 14:16 Apr 26, 2013 Jkt 229001 April 23, 2013. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on April 18, 2013, BOX Options Exchange LLC (the ‘‘Exchange’’) filed with the Securities 11 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 PO 00000 Frm 00073 Fmt 4703 Sfmt 4703 and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Rule 7170 (Obvious and Catastrophic Errors) to clarify that the Exchange may grant Obvious Error relief in the event of unusual circumstances, even if the Market Operations Center (‘‘MOC’’) of BOX Market LLC (‘‘BOX’’) was not notified within the time periods prescribed in the rule. The text of the proposed rule change is available from the principal office of the Exchange, at the Commission’s Public Reference Room and also on the Exchange’s Internet Web site at https:// boxexchange.com. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The self-regulatory organization has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend Rule 7170 (Obvious and Catastrophic Errors) to clarify that the Exchange has the ability to grant Obvious Error relief in the event of unusual circumstances, even if the MOC was not notified within the time periods prescribed in the rule. This is a competitive filing that is based on the Obvious Error rules of the NASDAQ Stock Market LLC (‘‘NOM’’), NASDAQ OMX PHLX LLC (‘‘PHLX’’), Chicago Board Options Exchange (‘‘CBOE’’), C2 Options Exchange (‘‘C2’’), International Securities Exchange (‘‘ISE’’), NYSE Arca Options (‘‘Arca’’), NYSE MKT, LLC (‘‘MKT’’), BATS Exchange, Inc. (‘‘BATS’’), Miami International Securities Exchange LLC E:\FR\FM\29APN1.SGM 29APN1

Agencies

[Federal Register Volume 78, Number 82 (Monday, April 29, 2013)]
[Notices]
[Pages 25129-25130]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-10026]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69434; File No. SR-FICC-2013-03]


Self-Regulatory Organizations; Fixed Income Clearing Corporation; 
Notice of Filing of Proposed Rule Change To Amend Mortgage-Backed 
Securities Division Rules Relating to Allocation of an Indemnity Claim 
Made in Connection With the Use of the Federal Reserve's National 
Settlement Service

April 23, 2013.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on April 15, 2013, the Fixed Income Clearing Corporation (``FICC'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I, II, and III below, which 
Items have been prepared by FICC. The Commission is publishing this 
notice to solicit comments on the proposed rule change from interested 
persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The purpose of the proposed rule change is to correct Rule 11, 
Section 5(o), of FICC's Mortgage-Backed Securities Division (``MBSD'') 
Clearing Rules in order to accurately reflect the manner in which FICC 
should allocate an indemnity claim made in connection with the use of 
the Board of Governors of the Federal Reserve System's (``FRB'') \3\ 
National Settlement Service (``NSS'').\4\
---------------------------------------------------------------------------

    \3\ The acronym ``FRB'' is a defined in MBSD's Clearing Rule 1 
(Definitions) as the Board of Governors of the Federal Reserve 
System and each Federal Reserve Bank, as appropriate.
    \4\ The text of the proposed rule change is provided as Exhibit 
5 to this filing and is available at www.dtcc.com/downloads/legal/rule_filings/2013/ficc/SR_FICC_2013_03.pdf.
---------------------------------------------------------------------------

 II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, FICC included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. FICC has prepared summaries, set forth in section (A), 
(B) and (C) below, of the most significant aspects of such 
statements.\5\
---------------------------------------------------------------------------

    \5\ The Commission has modified the text of the summaries 
prepared by FICC.
---------------------------------------------------------------------------

(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    FICC's Government Securities Division (``GSD'') and MBSD each use 
the FRB's NSS for Funds-Only Settlement \6\ and Cash Settlement \7\ 
purposes, respectively. GSD's Rule 13 and MBSD's Rule 11 address the 
situation where the FRB makes an indemnity claim in connection with the 
use of the NSS service by FICC. Pursuant to the GSD and MBSD rules, if 
FICC receives an FRB indemnity claim, FICC will apportion the entire 
liability to the GSD netting members or MBSD clearing members, as 
applicable, for whom the settling bank was acting at the time.\8\ If 
such amounts are not sufficient to fully satisfy the FRB indemnity 
claim, each of the GSD and MBSD rules currently provide different 
directives as to how FICC should handle the remaining loss. The GSD 
rules state that FICC will treat the remaining loss as an ``Other 
Loss,'' as defined in GSD Rule 4, and allocate accordingly.\9\ In 
contrast, MBSD Rule 11, Section 5(o), states that FICC will allocate 
the remaining loss among all MBSD clearing members in proportion to 
their relative use of the MBSD services (based on fees).
---------------------------------------------------------------------------

    \6\ ``Fund-Only Settlement Amount'' is defined under Rule 1 of 
GSD's Rulebook as the net dollar amount of a netting member's 
obligation, calculated pursuant to GSD's Rule 13, either to make a 
funds-only payment to GSD or to receive a funds-only payment from 
GSD. See GSD Rule 13 for the rules related to funds-only settlement.
    \7\ ``Cash Settlement'' is defined under Rule 1 of MBSD's 
Clearing Rules as the payment each business day by MBSD to a member 
or by a member to MBSD. See MBSD Rule 11 for the rules related to 
cash settlement.
    \8\ See GSD's Rule 13 Section 5(o) and MBSD Rule 11, Section 
5(o).
    \9\ Rule 4(f) of GSD's Rulebook.
---------------------------------------------------------------------------

    The purpose of the proposed rule change is to correct MBSD's Rule 
11 in order to accurately reflect the correct manner in which FICC 
should allocate an indemnity claim made in connection with the use of 
the FRB's NSS. The MBSD provision in Rule 11 was drafted prior to the 
MBSD becoming a central counterparty and adopting a loss mutualization 
process similar to the GSD process. When FICC filed its rule change to 
provide guaranteed settlement and central counterparty services,\10\ 
which among other things established the loss mutualization process, 
the MBSD NSS indemnity provision requiring the current loss allocation 
process was inadvertently overlooked and therefore not updated during 
FICC's efforts to harmonize the GSD and MBSD rules. Accordingly, the 
rule change proposes to correct this oversight by revising MBSD Rule 
11, Section 5(o), to reflect that all remaining losses from a FRB 
indemnity claim should be treated as an ``Other Loss'' as defined in 
MBSD Rule 4 and allocated accordingly.
---------------------------------------------------------------------------

    \10\ Exchange Act Release No. 66550 (March 9, 2012), 77 FR 15155 
(March 14, 2012) [File No. SR-FICC-2008-01] (order approving amended 
proposed rule change to allow MBSD to provide guaranteed settlement 
and central counterparty services).
---------------------------------------------------------------------------

    FICC believes the proposed rule change is consistent with Section 
17A of the Act and the rules and regulations thereunder because it 
would facilitate the prompt and accurate clearance and settlement of 
securities transactions by correcting MBSD's rules to accurately 
reflect the loss allocation procedures in

[[Page 25130]]

connection with NSS and to ensure that there is consistent treatments 
of such losses between the MBSD and GSD rules.

(B) Self-Regulatory Organization's Statement on Burden on Competition

    FICC does not believe that the proposed rule change will have any 
impact or impose any burden on competition.

(C) Self-Regulatory Organization's Statement on Comments on the 
Proposed Rule Change Received From Members, Participants or Others

    Written comments relating to the proposed rule changes have not 
been solicited or received. FICC will notify the Commission of any 
written comments received by FICC.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days (i) as the 
Commission may designate if it finds such longer period to be 
appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
file Number SR-FICC-2013-03 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.
    All submissions should refer to File Number SR-FICC-2013-03. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with Commission, and all written communications relating to the 
proposed rule change between the Commission and any person, other than 
those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Section, 100 F Street 
NE., Washington, DC 20549, on official business days between the hours 
of 10:00 a.m. and 3:00 p.m. Copies of such filing will also be 
available for inspection and copying at the principal office of FICC 
and on FICC's Web site at https://www.dtcc.com/downloads/legal/rule_filings/2013/ficc/SR_FICC_2013_03.pdf. All comments received will be 
posted without change; the Commission does not edit personal 
identifying information from submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-FICC-2013-03 and should be submitted on 
or before May 20, 2013.

    For the Commission by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Elizabeth M. Murphy,
Secretary.
[FR Doc. 2013-10026 Filed 4-26-13; 8:45 am]
BILLING CODE 8011-01-P
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